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Wholesale inflation may inch up in Jan-Feb, remain sub-4% in 2017

As wholesale prices rose 3.39% in December, India Inc today said the focus should be on growth-oriented reforms that boost consumption, investment and job creation, while economists opined that inflation may rise in January and February.

“At this juncture, it remains critical to further growth considerations. The latest index of industrial production numbers have reported an improvement; but this has come on the back of a favourable base.

“For a sustained turnaround, we will need to keep the focus on reforms. The forthcoming Union Budget is being looked forward to with great anticipation and should focus on driving consumption, investment and job creation,” Ficci President Pankaj Patel said.

Wholesale inflation rose to 3.39% in December 2016, mainly due to rise in prices of manufactured items, even as food articles turned cheaper.

“Steady and continuous rise in prices of crude oil and strengthening of the dollar for the last one month may have negative impact on input prices for the industry, which has already started the pressure on its profitability owing to low demand,” Assocham Secretary General D S Rawat said.

“Food inflation is likely to rise over the course of the ongoing quarter, as the base effect turns unfavourable, and the end of winter pushes up prices of perishables.

“The trajectory of WPI inflation is likely to chart a rise in January and February 2017, before recording a dip in March 2017. In ICRA’s view, the wedge between the two inflation metrics would re-emerge in January 2017, with WPI inflation expected to exceed CPI inflation for the next few readings,” Aditi Nayar, Principal Economist at ICRA said.

Care Ratings said, “As widely expected, the WPI inflation for this month indicated an uptick owing to increased fuel prices and manufactured products. The ease in food prices however, have checked the rising inflation rates except for certain seasonal price hikes. We expect the WPI to be in the range of 3.5-4% for the rest of the year.”